A Chequer-Board of Nights and Days

As the nuclear stand-off with Iran helped push oil prices to near-record levels, President Bush once again declared, "Dependency on oil creates an economic problem for us, and it creates a national security problem for us."

But if Iran's behavior makes the case for anything at all, it is that America should become more - not less - "dependent" on foreign oil. In fact, the best way for America to defuse the so-called Middle Eastern oil weapon is by purchasing even more oil from the region.

The economic case for energy independence has always been nonsensical. It is not possible to shield American consumers from rising prices at the pump simply by replacing foreign oil with domestic oil. Why? Because regardless of where the oil is produced - Oman or Oklahoma - its prices are set by the global market.

The global demand for oil and its ease of transportation have synchronized oil prices everywhere. Therefore, unless compelled by draconian government mandates, no American company that can command $3 a gallon in Oman would sell it for much less in Oklahoma. If war prevents Middle Eastern oil from reaching its global customers, the incentive for American companies to sell U.S. oil overseas would be even greater given the higher prices that it would fetch. War or peace, no amount of domestic production will give us "independence" from the law of supply and demand.

But if domestic production won't ensure access to cheap oil, some believe that it will at least shield us from the kind of geo-political manipulation that Arab countries attempted during the 1973 oil embargo. That, however, is also a myth.

For starters, OPEC -- the Arab-dominated cartel of oil producing nations - did not succeed in its manipulation even then. It lifted the embargo in less than two months, once it became clear that while its members were giving up oil revenues, its oil was still reaching the United States because of diverted shipments from Europe. There was some diminution of oil supply in the United States, but not nearly enough to do any serious damage to the American economy.

The long lines outside gas stations that Americans associate with the embargo resulted more from panic buying and domestic oil price controls rather than lost Arab oil, notes M.A. Adelman, a professor of economics at the Massachusetts Institute of Technology.

Of course, one may make the counterargument that energy independence is needed to ensure that panic buying no longer afflicts the gas market. Still, this is an interesting take on things, and merits further and more careful consideration.